President Stands by Herders while Speaker Zeroes in on Miners

President of Mongolia Battulga addressing the parliament (via Montsame)

The Fall legislative session opened on Oct 1 with President Battulga castigating MPP lawmakers for ballooning deficit (MNT 4.8 trillion ~ $1.7 billion this year and MNT 2.2 trillion proposed in 2021) and mismanaging budget by plowing taxpayers’ billion Tugriks into school and healthcare buildings in places with handful residents and with no running water and electricity.

The president singled out gross negligence of local administrators in Bayankhongor province, a home constituency of Speaker Zandanshatar who may become a potential opponent in the presidential race, and went at length describing difficulties of poverty-stricken herders as the countryside was left abandoned.

According to him, there was also growing gap in herders’ income as the western provinces (where Battulga lost in the 2017 elections) were falling behind the eastern ones. Western herders still couldn’t sell their raw cashmere because of high transport costs and logistical difficulties and they could fall below the poverty line.

To address rural problems, President Battulga offered to re-populate abandoned soums and remote areas with incentives and subsidies. He also called to allocate funding for building an industrial complex in Darkhan to buy animal skin, wool and cashmere from herders to process and export value-added / finished products.

The president was obviously on his re-election campaign mode going after the ruling party as the economy is in free fall. But he didn’t think anything wrong with the Cabinet’s proposal to extend the cash handout increase to children until June 2021, which is the main culprit of the deficit.

In contrast, Speaker Zandanshatar in his opening speech (the PM doesn’t usually address the opening session) talked about the busy and lengthy legislative agenda this Fall as a number of new laws and rules were pending since May (read: MPP was rather busy with their re-election).

As part of constitutional reform, the speaker asked lawmakers to make the people true ‘owners’ of the natural resources in the spirit and letter of Article 6 of the new constitution.

The Fall agenda includes six legislative pieces on the mineral sector reform, namely amendments to the Mineral Law, State and Local Property Law, Environment Protection Law and new bills on the State Common Property Law, the State-owned Company Law and the National Wealth Fund Law.

The speaker noted that ‘state common property’ ("төрийн нийтийн өмч” in Mongolian) in the Article 6 was the guiding principle in the mineral sector reforms suggesting that people (=citizens) would be and should be controlling the mineral assets with the state involvement.

But it’s still not clear how that will be achieved and to what extent the state (read: the ruling political party) would keep their control over major cash cows, such as copper-molybdenum Erdenet mine (Would state equity be ever offered to the public? Will government compensate 49% to a private owner following nationalization?), Tavan Tolgoi coal mine (Is an international IPO off-table for good?) and copper-gold-silver Oyu Tolgoi mine (Will the state swap its 34% with higher royalties?)

We'll keep watch on the mineral rule changes in coming weeks.

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